Newsworthy, Finally

After 7 plus years, the S&P 500 finally made a record closing high. Its a long time coming but worth the wait!

Breakout Day

Yes, the volume was a bit lighter than the cognoscenti would prefer but you can't argue with the new highs nor the breadth. It feels to me that this was a key breakout day for a lot of stocks. On my list AMX, AAPL, SCHW (see, those small sacrifices to the market gods can do wonders), KNOL, GOOG (another sacrifice play), DECK, OSG, CTL, et al, flew!

I find it so interesting how quickly concerns were raised in the past week about this trend feeling tired and vulnerable. And then just like that it revitalizes and runs. Although a sideways week from here wouldn't offend me at all my guess is that the upside accelerates a bit above trend from here.

As to why, I hope one day we find out.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

TGIF - Memorial Day Weekend

Stocks got nailed this week and that took some of the steam away from the market. The sell side was dominated by big volume, weakness in the AD line, and a fallout in new highs. The extreme immediate shift has the right feel to it - sellers felt bold and sold aggressively. What happened next is typical of bull markets - an immediate rally back to the old highs. Many will get hung up on the weak volume or AD line of or new highs but for the present that is less important than the direction. The internals will fix themselves within a few days.

Check out the action in RIMM (a new name for us), AMX, SBS, AAPL, PCU, OSG, CI, TU & DECK. These are powerhouse stocks that don't quit and the names to build a portfolio around. Lots of factors go into good portfolio management and we understand the process better than most. Check in with us if you have any thoughts or questions.

Have a great weekend. In memory of the fallen...

What a Week!

The uptrend that ran into resistance late last week reasserted itself. The end was a push to new intermediate highs for the SPX and all time highs for the NYSE and the Industrials. The Transports are close to a new high which would be significant. The Mid Cap index and Utilities are a tad below a record, too. Notably, the Small Caps and the NASDAQ lag here. The market is telling us it's becoming a large cap affair now with a bias to the NYSE.

Big news on GE selling the plastics division! Snore. That stock is one of the most dead issues and is typical of this market. It's about new stocks and new stories, not the old mega-cap favorites. AMX was hot the whole week, along with TU, SCI, GS, ARW, and a ton more. The best winners seem to be mid-large cap stocks that are not household names. All in all, we got a lot of them here!

Despite reasons I have mentioned for this market to slow down for the next 6 weeks it appears to be just the opposite. The S&P 500 is within a trading day or two of record highs. That should be another reason to slow it down as some supply in waiting finally comes out. But the demand feels so strong here and the disbelief still high that a sharp surge wouldn't surprise me. A meltup in store? Stay tuned!

Have a great weekend.

hmmm...

Well that ended with more of a whimper than a bang but little changes in the current mindset. Interesting point is the NYSE was barely changed. Note that all of the antiquated Dow Indices were up. Maybe that's what Murdoch is after!

Monday, Tuesday, Points of Interest

Monday was simply a rest day. Stocks that we follow came in with few acting outside of the way that winning stocks act. It was enough to keep the naysayers happy. They probably won't get much more than that. One might think that seasonally the market should pause further. The first quarter results are mostly announced so that stimulus is off the table. And, as we head to the back end of the quarter, typically earnings pre-announcements are made and they are usually negative in tone. So we ought to be adrift to some extent.
But no, that is not what we are seeing. The market continues challenge new highs and old highs alike. The S&P, 1512 now, is inching closer to the 1553 all time high from March 2000 - just 2.7% away - while the Dow, Mid Cap, Smalll Cap and NYSE all are at/within a day's trade of new highs and have been in new high ground for years/months. Interesting to note that the Russell 1000, the true large cap index, is just 0.38% off its all time peak also set in March 2000. So I would call that good confirmation of the large cap market. Even the Dow Theory camp can be happy as the Transports have set a record high a few weeks back, confirming the Industrial's strength. One of the few things that is a negative is that bearish advisors are towards the low end of the range and that suggests more rampant bullishness. If everyone is bullish, who is left to buy? So sentiment could be a concern but overbought markets can stay that way for an extended period of time and we haven't seen that go on for too long (yet). On the plus side of sentiment, odd lot short sales are at the high end of the range and usually this indicator is contrarian. Another sentiment indicator may be the sum total of Wall Street analyst's ratings. In May of 2000 and May 2007 there were reportedly the following breakdown of ratings:
..........................2000 ....2007
% rated buy.....73.9% ...46.4%
% rated hold....25.3% ...46.6%
% rated sell........0.8% .....7.1%
(this table may not appear cleanly on the blog so please struggle through it). It's well known that there were virtually no sell ratings during the 1990s bull market which was one thing that led to the analysts' scandal. That part is no surprise. But the buy and hold stats suggest a dearth of excitement from the analyst community. That's potentially a good thing and suggests much 'fire-power' on the sidelines. A good dovetail would be to find the % weighting in cash and short term bonds today at the large brokerages. Would like to see a 60-70% weight in stocks to support the notion that the public is not fully committed and has a way to go to be fully invested. (Data for the analyst numbers comes from the Gannett Journal News Business section today which is not the Wall Street Journal but still has the odd piece that's useful - see January 7, 2007 - "Geller sees Bull Market for Stocks".) The same paper reported that Bear Stearns wrote off its specialist unit and will take a $250MM charge. That's interesting for sure as markets are clearly changing to more electronic and less by hand/human intervention.

The most important thing to look at with the market is the stocks in one's portfolio. Today, PCU, PCG, OSG, DECK, SBS, GS, CI, AMX, NFS, ARW, SCI & AAPL (that last one doesn't quit) are all at or moving powerfully to new highs. Finally, SCHW, which we sold off a little - gotta throw that virgin into the volcano - is waking up and getting close to breaking out. The overall list is predominantly green. The red on the screen is also deserves careful inspection as it will be the source of funds to add to winners or to buy new names. JNJ, EL, OMX, DHR, & RAH are on the list for sale as they have broken down or lag the market more than is allowable. Managinng losses is certainly as important and likely more important than managing winners.

That's enough and all for today.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

Late Comment

Today should remove many doubts about this market. The nitpickers might complain about the lower volume today, or the only moderate new highs. Perhaps they might not like that the averages didn't completely erase yesterday's loss. Those points are true, including a nasty turn in the bond market that was unexpected. Its easy to find fault with anything but, the markets moved right back towards new highs, ups numbered downs by more than 3:1, and if you are a great stockpicker (or listen to a great stockpicker) you are chock full of AAPL, OSG, AMX, GS, etc.

Have a great weekend. And if you need a great stockpicker, I know just the one...

It's Time for a Correction! OK, Correction's Over!

We'll see how the day plays out but we are witnessing a tremendous bull market. Yesterday was enough to shake out more holders. Instead, buyers are taking the opportunity to buy them while they can. Looking at the list today shows across the board buying - PCU & AAPL at new highs, GS, AMX, GD, KSU, and more, all rallying sharpyly. Its very encouraging if you are 100% long!

Some things to consider as negatives might be that the new high/low list is not expanding at the rate it was. In late April the 10 day MA of highs was at roughly 300 new names daily, now it is under 250. That's not terrible but its something to note. The new lows are a tad higher but relatively insignificant in number. The market is less overbought than it was which could be good or bad. And breadth has softened as the A/D line came off the highs but is still above previous peaks. The NYSE composite had been the indicator of choice for the last 9 months but it failed to keep pace with the mid caps nor the blue chips on this last leg. An interesting study would be to compare the new highs and lows against total issues in the russell 1000 vs the russell 2000. My guess is that there's a shift towards large cap which may explain some of the aforementioned data points.

So, what does it all mean and better yet, what do we do with this information? My focus (outside of writing this blog and enjoying my life) is on portfolio management. A portfolio must be pruned like a garden. Weed out the bad stuff, cut back the overgrown plants, put it back in balance. Over the last few weeks we sold names like CME, MENT, SKX, PG, & LIZ. They just weren't working. We pruned/sold GOOG, SCHW, MER, & JWN as we are losing patience/confidence in the upside. Finally, we pruned back big winners like PCU, RL, & took profits in ISE (on the merger news). Then we added to names like CTL, & JLL and brought on new stocks like UNM, MET, PKI, TU, & OSG. The rest of the list, which is extensive, acts well and we are simply sitting back and letting them do their thing. As the famous (and ultimately suicidal) trader Jesse Livermore said, "It's not the trading that makes big money, it's the sitting". As long as the stocks perform, we hold 'em and even add to them. If not, cut the losses.

On an unrelated front, got a great mother's day gift this year for my wife. Philips Electronics makes a terrific digital photo picture frame. It's an incredible piece of technology, affordable, and highly recommended.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

Breakup!

In the midst of all the merger mania, the WSJ article discussing a GE breakup is like a breath of fresh air. This is the second article in an unintentional series. Citigroup was the first several weeks or a couple of months back. Seems these giant companies are so difficult to run that maybe they should be broken up. My purpose is not to extol the virtues or detriments of such a move but to dovetail this to previous comments about the inability of last market's leaders to be this market's leaders. The reasons are many and this is just another one. Perverse in a way that these companies huge success begets enormous size that leads to management's inability to reach profit growth goals. But if you are a holder of either stock, the reasons don't matter - the stocks simply stink. Just take a look at AAPL, DECK, PCU, GS and many others and you can more readily see that its a new market with new leaders. That's the focus.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this newsletter (article), will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Geller Capital Management, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. A copy of our current written disclosure statement discussing our advisory services and fees is available for review upon request.

What a Difference a Week Makes

The last post was on April 30 when I note the market looked sloppy and tired. It was but that was also the end of it. Five straight advances thru midday today and we are back to new highs. Don't argue with this bull market as you will be on the losing end of that trade more often than not. Some of the biggest winners from the last month exceeded expectations and continue to run. KNOL, DECK, RS, DOLR, LZ, RG, & PCU to name a few and not one is a household name. Yet most of these best names are over $1Billion in market cap and most would fall into the large cap classification. Some of the old names that still garner the media hype - GE, MSFT, INTC, MRK, to name a few - have improved markedly but still suffer from overhead resistance. There is still so much stock waiting to break even and that will most surely slow returns. The best performance will come from new stocks that are underowned but have the best corporate results forcing buyers into them to keep pace with the Joneses. And, it appears to me that the larger cap stocks are gaining relative ground to smaller cap stocks. The best area appears to be in the $1 - 25 Billion range.